Huakang Biomed Announces First Annual Results Since Listing

Loss Reduced, Profit before Tax Excluding Listing Expenses amounted to RMB9.1 Million;
Continuous Focus on Research and Development;
Lying Strong Foundation for Future Growth

HONG KONG – (ACN Newswire) – Huakang Biomedical Holdings Company Limited (“Huakang Biomed” or the “Company”, together with its subsidiaries, the “Group”, stock code: 8622), a medical device group specialised in the research and development, manufacture and sale of a wide range of IVD reagents in PRC, is pleased to announce its first annual results for the year ended 31 December 2018 (the “Year”), since its listing on the GEM of The Stock Exchange of Hong Kong Limited (SEHK) on 13 December, 2018.

During the Year, the Group recorded satisfactory revenue of approximately RMB28.7 million (2017: RMB 26.5 million), increase by 8.0%, or RMB2.1 million, compared to the previous year, which was contributed by an increase in the sales of its detection kit for IgG antibody to Schistosoma japonicum by approximately 394.0% from RMB435,000 in 2017 to RMB2.1 million in 2018, primarily because several new distributors commenced to sell its detection kit for IgG antibody to Schistosoma japonicum since 2018. The Group also witnessed an increase in the sales of its liver fluke IVD reagent products from approximately RMB1.5 million in 2017 to approximately RMB2.4 million for 2018, representing an annual increase of 63.1%, or RMB929,000, which was mainly attributable to a wider recognition and thus higher purchase volume of the products by existing customers.

The Group recorded a gross profit of RMB21.6 million for the year, representing an increase of RMB3.0 million or 16.4% from RMB18.5 million for 2017. The Group improved its gross profit margin from 69.8% in 2017 to 75.3% in 2018, which was mainly due to the decrease in the average headcount of the production staff (including production, quality management and engineering departments) and higher production efficiency of the production staff due to their improved production skills and techniques as well as the improved efficiency in utilising raw materials in the production process by the production staff.

The Group recorded a loss for the year of approximately RMB459,000 (2017: net loss for the year of approximately RMB2.0 million). The decrease in net loss was mainly due to the decrease in listing expenses. Basic loss per share for the year was RMB0.15 cents (2017: loss per share of RMB0.75 cents). The Group recorded profit before tax excluding listing expenses of approximately RMB9.1 million (2017: RMB11.9 million). The Board did not recommend payment of a final dividend for the Year.

The Group is committed to research and development and conduct the research and development activities through its internal research and development department. The total amount of the investment in the research and development project was approximatelyRMB$2.6 million in 2018 (2017: RMB2.2 million), such increase was mainly due to that the Group had seven active research projects in 2018 (2017: three). The Group further completed a series of registrations with the CFDA (China Food and Drug Administration) and the GDFDA (Guangdong Food and Drug Administration), as well as filings with the Shenzhen MSA (Market Supervision Administration of Shenzhen Municipality). For the year ended 31 December 2018, the products of the Group comprised 32 male fertility IVD reagents, two parasite antibody detection reagents, one EBV antibody detection reagent and 6 female fertility IVD reagents, of which 27 IVD reagents are being manufactured and sold by the Group, including 24 male fertility IVD reagents, two parasite antibody detection reagents and one EBV antibody detection reagent.

Mr. Zhang Shuguang, Executive Director and Chairman of the Board of Huakang Biomed commented, “The year 2018 marked a significant milestone in the development of Huakang Biomed. Listing on the GEM of SEHK brings new opportunities to the Group. More resources can be devoted to develop new products, improve existing products and carrying out international cooperation projects. Despite the impact of decreasing birth rate of the PRC, the increase in price sensitivity of some of the customers and the impact of the vaccine incident of a PRC listed biotech company in late 2018, orders for our products kept rising during the year. In 2018, the Group continued to extend its business reach in the PRC and acquired 12 new direct sale customers. We are optimistic about the PRC male fertility IVD reagent industry and anticipate the PRC Government will keep focusing and supporting the development of the biomedical industry. The growth of the industry is expected to be driven by the increasing rate of infertility, widespread acceptance of assisted reproductive treatment, rising per capita income and expenditure on healthcare, implementation of a universal two-child policy, favourable policies by the PRC Government in support of a hierarchical medical system and broader coverage of the country’s basic medical insurance system.”

Mr. Zhang added, “To capture the market opportunities, the Group will expand our product portfolio and improve our existing product offerings, strengthen our product research and development capabilities, cultivate and recruit talented employees and develop our auxiliary reproductive supply business. In late 2018, we participated in the Beijing Andrology Conference, the 19th National Conference on Association of Andrology in Dalian City and the exhibition in Nanchang City, We will actively participate in industry activities in future to expand and consolidate our sales and distribution network. Looking forward, the Group will improve the product quality to match the requirement of CE certifications and apply ISO 13485 certifications in the first half of 2020. We also intend to apply the CE certifications and initiate multinational collaboration projects as we introduce overseas partners, together with their brands and products to PRC in the second half of 2020. Meanwhile, we plan to export our products to overseas markets and will actively explore new markets, in particular, Eastern China and Yangtze River Delta regions such as Shanghai, and also Liaoning Province, Jilin Province, and Heilongjiang Province. We will continue striving for better results for the Group and bringing higher returns to the shareholders.”

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